## Stock Market Outlook
The first full trading week of 2026 kicks off with investors closely watching key macroeconomic data and geopolitical developments. After a strong performance in 2025, where the S&P 500 gained 16%, analysts are predicting more modest single-digit gains for the index this year. The focus will be on whether small and mid-cap stocks can take the lead, and how the AI sector will transition from hype to tangible results.
This week’s economic calendar is packed with important releases, including the US ISM Manufacturing and Services indices, ADP employment figures, and the crucial December nonfarm payrolls report on Friday. The jobs report will be particularly scrutinized for signs of a slowdown in the labor market, which could influence the Federal Reserve’s policy decisions in the coming months.
Geopolitically, the recent US military operation in Venezuela has introduced a new element of uncertainty into the markets. While the immediate impact on oil prices is expected to be limited, the long-term implications for the region and global energy markets will be closely monitored.
## Forex Market Outlook
The US Dollar is expected to continue its downward trend from 2025, when it posted its steepest annual decline since 2017. The dollar’s weakness has been attributed to a combination of factors, including US policy shocks and the Fed’s shift towards a more dovish stance. With the Fed having room for further easing, while most other major central banks have finished their easing cycles, the path of least resistance for the dollar appears to be lower.
In the currency markets, the **USD/JPY** pair is showing signs of a potential bullish breakout, but is also facing resistance from a long-term trend that is losing momentum. The **EUR/USD** is expected to see low volatility, while the **GBP/USD** will be looking to recover from its losses against the euro and Swiss franc in 2025.
## Commodities
Precious metals are coming off a recent bubble burst, with silver, platinum, and palladium experiencing significant drops. Gold has held up relatively well but is also facing headwinds from a potential bearish swing in the S&P 500. In the energy market, oil prices are likely to be influenced by the ongoing situation in Venezuela, although the short-term impact is expected to be contained.
## What to Expect Today
– **Stock markets** are likely to trade cautiously ahead of the key economic data releases later in the week.
– The **US Dollar** may see some short-term fluctuations but the overall trend remains bearish.
– **Commodities** will be sensitive to geopolitical news and broader market sentiment.
